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Unscripted™ Entrepreneurship:A Business That Pays More Than Money, It Pays Time.

"Fastlane" is an entrepreneur discussion forum based on The Unscripted Entrepreneurial Framework (TUNEF) outlined in the two best-selling books by MJ DeMarco (The Millionaire Fastlane and UNSCRIPTED™). From multimillionaires to digital nomads, the forum features real entrepreneurs creating real businesses.

I decided to rent out a room (take on a boarder) for $300 per month. I used that for fun money.

Part 2 - Getting in the game, kinda

I read RDPD soon after purchasing the house, maybe even before I picked up the boarder. I lived there until 2005, and by that time the situation had changed. The original boarder had moved out and I advertised his room for $350. I got lots of calls, but most didnâ€™t pan out because the rooms were REALLY small (9X9).

I finally picked up this one guy who turned out to be a really good roommate. He was recently divorced (oddly enough so was the first boarder), and really just needed a place to crash.

He eventually introduced me to an acquaintance of his who was really down on his luck. His wife was having serious alcohol and drug problems and he wanted to get his two kids (two beautiful girls 5 & 8) out of there, and I had the room. I wrote a letter to his social worker stating that I had two available rooms for them, which would rent out for $450 per month. This would keep the social workers from taking the kids away, you see.

So now I was brining in $800 per month extra (all under the table), which was really good as I was finally able to start paying down my line of credit (car loan).

Part 3 - disaster

Things were working out really great. I had a full house â€“ 3 bachelors, 2 dogs & 2 kids. It was the perfect scenario for a sit-com. Then a friend of mine came to visit one weekend after not seeing each other for about a year and we were engaged by the end of the weekend.

I left the two guys living there with an increase in rent to $600 each which somehow I calculated to be break even on the house. In winter, I would have negative cash flow due to utilities, and in summer I would positively cash flow to cover for the winter utilities.

The two roommates stopped getting along because one of them got stuck doing the cleaning. It got worse and worse each month until finally they decided that the guy with the kids would leave.

The existing tenant didnâ€™t have enough to cover payments, and the other tenant left without paying for his last monthâ€™s rent. Existing tenant found another roommate, but that didnâ€™t work out, then found another which started working again.

Unfortunately by the time this was resolved, summer was over and we were back in winter, negative cash flowing again. I missed all of the positive cash flows that I needed in order to get through the winter without putting money into the house account. My wife wasnâ€™t impressed, but at least rent was being paid.

Part 4 â€“ the last straw

Skeletons have a way of catching up on a person. The new tenant after getting his life in order had his accounts frozen by the government for non-payment of child support in March 2006. This was not expected even from him because he was under the impression that when he and the girlfriend split, that he would have nothing to do with the child. Seven years later, there was a change of heart.

So now I was out rent again and my original tenant was tired of chasing down people to pay him to pay me. I went to Ontario in early July (my wife was 7 months pregnant), kicked out the tenants and sold the property. Son was born a week after I got back.

Sold the property for $140K, and that was the only good thing about this project since the gains out-weighed the losses.

Incidentally, my wife purchased her starter house in 2003 for $105K and sold it in 2006 for $205K. With these two gains we were able to purchase a larger / newer home for $275K. And itâ€™s where we are living now.

I'm still in.... It just took a while (about a year) to convince my wife that it's still a good idea - it really helped that our friends got themselves into the fastlane this year buying, renting and selling rental properties.

We bought 2 rentals this year, and once I've finished Vollucci's book, I'll be looking at apartment buildings.

What I learned from the above experience (in no particular order):

1. Never rent to friends - it's okay to like your tenants, but it's a business relationship first.

2. Cash Flow is king - I will only buy if the property has good cash flow first. I'll worry about gains later.

3. Tenant screening - this is so important and I'll probably never again rent to someone who is "down on his/her luck." I still have to streamline the screening process to make it painless for all.

rep + to you for the lessons learned bit.... that is the thing to carry forward.

Every experience - good or bad - has lessons.... and it is learning and remembering those lessons that help push you forward.

We actually formally incorporate lessons learned into our planning and goal setting.
We have a 3 ring binder labeled, "_____ Family Business"

In that binder, we have sections for

"family mission statement"

"goals"

"plans"

"lessons learned"

"net worth - where are we and where are we going?"

We review lessons learned and add to them every time we do an update in the notebook (about quarterly). It really helps us as we evaluate new situations or deals to look back on what we have done and what we have learned.

I love the 3 ring binder idea! Lessons learned are so key. I consider myself lucky if I get curve balls early on- that way I can make the necessary changes without it costing me big time. I am going to run with your idea ATW. Sometimes I get so frustrated that I'm not exactly where I want to be, and I forget how far I've come.

++ rep

"Instead of wondering where your next vacation is, maybe you ought to set up a life you don't need to escape from." ~Seth Godin

It was stressful at times, and I was divided between selling it or keeping it and finding new renters and hiring on a property manager. In the end, it didn't cash-flow so we sold.

Click to expand...

hiring a property manager has been key for me in a situation like this... hand it over to the PM and you are not emotionally caught up in the problems. Let them handle it.... and free yourself up for other things.

I agree completely. I should add that to lessons learned. Both of the properties we recently purchased have a property manager. I'm now learning how to manage the managers. For the most part, I don't even have to think about the properties.

Edit - that's not entirely true - am having issues with management company and may have to switch to another company or to a caretaker. I'll know more this week and maybe it's a topic of another thread - how / when to fire a property manager.

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The Fastlane Forum is an entrepreneur discussion forum based on the UNSCRIPTED® Entrepreneurial Framework outlined in the best-selling books The Millionaire Fastlane (2011) and UNSCRIPTED (2017).Learn More